Ontario Lien Alert!
Ontario’s Construction Act Transition Period & Your Deadlines
In December 2018, the Ontario legislature passed an amendment to its newly revamped Construction Act (formerly Construction Lien Act), which may impact the calculation of construction lien deadlines.
The first wave of changes went into effect in July 2018 and included changes to the deadline calculations for the filing of a mechanic’s lien.
- File the lien within 60 days from last furnishing materials or services, but within 60 days from the earlier of publication of the certificate or declaration of substantial performance, completion, abandonment or termination of the contract. (Increased from 45 days)
- File suit to enforce the lien within 90 days from the period in which the lien must be filed. (Increased from 45 days)
The Ontario legislature had earlier provided clarification on whether contracts would fall under old statute or new statute. Would-be-claimants would follow old statute if:
- The contract/improvement was entered prior to 7/1/18
- Procurement process began prior to 7/1/18
- Project is a leasehold interest & the lease was in effect prior to 7/1/18
Essentially, the statutory provisions that became effective 7/1/18 would apply if the contract or procurement process was initiated on or after 7/1/18.
Ah, the Old Adage… “What’s the Catch?”
Attorney Chad Kopach reviewed the new transition provisions in a post entitled “Subcontractor’s Lien Timelines Under the Construction Act,” which revealed some significant “catches.”
The first provision, as mentioned above, is based on the date the owner entered a contract with the general contractor. While there doesn’t seem to be much of a “catch” here, there is, of course, the strong likelihood that parties furnishing to the construction project won’t know the date of the contract.
The second provision (if procurement began prior to 7/1/18, old statute applied) was amended to provide additional clarification, but for me it seems to raise more questions. It appears the amendment was to better define the “start of the procurement process.”
Kopach advised, “The Act has recently been further amended to include language clarifying that a procurement process is started on the earliest of making: a) a request for qualifications, b) a request for quotation, c) a request for proposals, or (d) a call for tenders.”
Wow. My initial thought: How on earth would a material supplier know when a project owner opened the request for qualifications?
Now, it may be possible for parties to know when request for proposals began, if it was a formally posted process, but that’s a stretch. The pre-qualification/RFP process is frequently handled months, even years, before a project begins.
And the third provision? Kopach states,
“This transition provision meant that the old timeline could continue to apply to improvements [to a leasehold interest] for years in the future and had been criticized as creating too much uncertainty for too long a period about which timeline applies.”
Given the uncertainty, as Kopach mentions, additional amendments were enacted to cap the time period for a leasehold exception:
“The effect of this change is that the old timeline applies to pre-July 1, 2018 leases, but only if the contract was entered into prior to December 6, 2018, or if the procurement process was commenced prior to December 6, 2018.”
What’s the takeaway amid this confusion?
If you aren’t certain all of these events took place on or after July 1, 2018, follow the old statute.
Be conservative in calculating your deadlines. You don’t want to rely on the new 60-day deadline and later find the general contract or procurement began prior to 7/1/18 and that your lien rights should have secured by day 45. It is certainly better to file a lien early than file a late lien & risk it being unenforceable.
I’ve said it before, “it’s only the beginning.” When statute changes, there is assuredly an adjustment period which will result in amendments. These changes aren’t the first & definitely aren’t the last.